0% on Purchases Credit Card: Meaning and Benefits
When browsing through credit card offers, you may have come across a term that seems too good to be true: "0% on purchases." But what does it really mean, and is it as amazing as it sounds? In this article, we'll delve into the world of 0% on purchases credit cards and explore their benefits.
What is 0% on Purchases?
A 0% on purchases credit card is a type of credit card that offers a promotional interest rate of 0% on new purchases made within a specific period. This means that during the promotional period, you won't be charged any interest on your purchases. This can be a huge advantage, especially for those who want to make large purchases or need to finance their expenses over a longer period.
How Does it Work?
Here's an example to illustrate how a 0% on purchases credit card works:
Let's say you apply for a credit card that offers 0% on purchases for 12 months. You make a purchase of $1,000 on the card and pay $100 per month. During the 12-month promotional period, you won't be charged any interest on your outstanding balance. This means you'll only pay the principal amount of $1,000, divided into 12 monthly installments of $100.
Benefits of 0% on Purchases Credit Cards
There are several benefits to using a 0% on purchases credit card:
Save on Interest Charges
The most obvious benefit is that you won't be charged any interest on your purchases during the promotional period. This can save you a significant amount of money, especially if you're making large purchases or need to finance your expenses over a longer period.
More Time to Pay
0% on purchases credit cards often come with a longer repayment period, giving you more time to pay off your purchases without incurring interest charges.
Increased Purchasing Power
With a 0% on purchases credit card, you may feel more comfortable making larger purchases, knowing that you won't be charged interest on them.
Things to Consider
While 0% on purchases credit cards can be a great deal, there are some things to consider:
Promotional Period Expiration
After the promotional period ends, the regular interest rate will apply to your outstanding balance. Make sure you understand the regular interest rate and plan your payments accordingly.
Interest Rate After Promotional Period
The regular interest rate may be higher than what you're used to, so it's essential to make timely payments and avoid interest charges.
Fees and Charges
Some 0% on purchases credit cards may come with annual fees, late payment fees, or other charges. Make sure you understand all the fees associated with the card.
Conclusion
A 0% on purchases credit card can be an excellent option for those who want to make large purchases or need to finance their expenses over a longer period. However, it's essential to understand the terms and conditions, including the promotional period, regular interest rate, and fees and charges. By using a 0% on purchases credit card responsibly, you can save on interest charges and enjoy more flexibility in your finances.
